Between September 2016 and September 2018, the UAE witnessed several federal legislations (laws, legislative decrees, cabinet decisions, ministerial decrees, all of which comprise new tax legislation). This legislation is new to the community and the Emirati judiciary, and came in succession rapidly. In September 2016 a law was passed establishing the Federal Tax Authority. In 2017, the Tax Procedures Law was issued, followed by the Federal Decree-Law on Excise Taxation, and the Federal Decree-Law on Value Added Tax. In the same year, the State ratified the Unified Taxation Agreement for the GCC and a similar Value Added Tax (VAT) agreement. In addition to several organizational decisions issued by the Council of Ministers related to these laws.
Federal Law No. (7) of 2017 on Tax Procedures is at the forefront of UAE tax legislation as the procedural framework for all procedures related to tax matters, including requests for review of decisions issued by the Federal Tax Authority, as well as consideration of objections against decisions of the Federal Tax Authority before the Tax Disputes Resolution Committees, in addition to the statement of procedures for appeal against the decisions of the Commission before the courts.
Of course, in this paper, we are not in a position to provide a detailed explanation of the Tax Procedure Law and its Implementing Regulations, but rather to express our views as to what the tax legislation should have paid attention to. Prior to the statement of our views, it is better to recall the following:
1. Taxes are payments made by a person to the State and have no justification except subjecting the payer to the financial authority of the State, without any direct relationship between the State and between the public services rendered by the State through its financial activity. This is in addition to the fees charged by the State in return for an activity that is of particular interest to it. The royalty is what some people pay for the benefit of a particular administrative activity, a special economic benefit in excess of what others benefit because they are in a particular position that allows them to benefit.
2. The imposition, regulation and collection of taxes shall be matters which fall under the purview of the Federal Government, pursuant to Article 120 of the Constitution.
3 - Tax law is classified as a branch of administrative law, as it regulates the relationship between the state authority and individuals, but it joins with other branches of law such as penal law, civil law, civil procedure law, and other laws.
After this introduction, we provide our views on the Tax Procedures Law and its Executive Regulations as follows:
First: The law omits determining the degree of the competent court
The law defines the "competent court" as follows: - [The Federal court within whose jurisdiction the Authority’s Head Office or Branch is located]. This definition was vague. Federal courts in accordance with the Federal Judicial Authority Law consist of federal courts, federal appellate courts and the Federal Supreme Court. Which court is intended by definition? If the Tax Disputes Resolution Committees issue a decision on the objection and which the objector wishes to appeal, what federal court has jurisdiction to hear the matter? The primary or appellate or supreme? The law does not specify this issue clearly.
Within the framework of the same definition, the competent court shall be the Federal Court, within its jurisdiction, the headquarters of the Authority or one of its branches. According to the law establishing the Authority, the headquarters will be in the city of Abu Dhabi, and the Authority may establish offices within the country, such as having an office in Dubai, Sharjah or Ras Al Khaimah.
An issue arises where the Federal Tax Authority and the Committee has a presence in the Emirate of Dubai. This emirate does not have a federal court. Does any federal court have jurisdiction over a tax dispute that originates in Dubai? The same applies to Ras Al Khaimah, whereas this problem does not arise in the city of Abu Dhabi because of existing federal courts [Abu Dhabi Federal Court - Abu Dhabi Federal Court of Appeals, Federal Supreme Court]. The best solution for solving the problem of jurisdiction in the Emirate of Dubai and Ras Al Khaimah is to refer the appeal of the decision of the Tax Committee to the nearest Federal Court; the Federal Court of Sharjah, if the Authority has a branch in Sharjah or is referred to the Abu Dhabi courts as the State Federal Courts.
Second: Omission in the law of the type of appeal against a decision of the Committee
Article (33) of the Tax Procedures Law provides that:
Without prejudice to the provisions of Article (32) of this Law, the Authority and a Person may challenge any of the Committee’s decisions before the Competent Court within 20 business days from the date of notification of the objector thereof.
According to UAE procedural legislation, challenging administrative or judicial decisions and judgments can be via four forms: objection [in absentee criminal judgments], judicial appeal, reconsideration and rebuttal. For each type of challenge, the respective grounds and rules are detailed in the civil procedures and federal criminal procedures legislation. The Tax Procedures Law did not clarify the form if a grieving party decides to challenge the decisions of the Committee before the competent court.
It would have been more effective if the legislator clarified the form of the challenge against a Committee decision, as the legislator did so in the law regulating the legal profession whereas a challenge against the decisions of the Disciplinary Board is considered an appeal to the Criminal Circuit of the Federal Supreme Court.
Our opinion is that the Tax Dispute Resolution Committee is an administrative committee formed to decide on administrative decisions issued by an administrative body [the Federal Tax Authority]. Therefore, what is issued by this Committee is considered an administrative act subject to the control of the judiciary through administrative proceedings that are filed before the Federal Court of First Instance, and that what is issued by this court is subject to the two levels of judicial appeal.
Thirdly: The law omits references to other legislation
The art and accuracy of legislative drafting require the creation of a kind of complementary relationship between similar laws and legislations in the subjects it organizes, so that some of the provisions of a law can be borrowed to supplement a deficiency or fill a vacuum in another law. THE UAE Federal Supreme Court has set forth the rules of this referral in myriad provisions, for example:
- Article (4) of the Personal Status Law
In the absence of any text in this Law regulating the procedures of any matter, the provisions of the Civil Procedures Law and the Law of Evidence in Civil and Commercial Transactions shall apply.
- Article (1 / paragraph 5) of the Criminal Procedures Law (Penal Code)
The provisions of the law shall apply to the civil courts unless a special provision is made in this law.
- Article (4) of the Law on International Judicial Cooperation in Criminal Matters
The provisions of the Criminal Procedures Law, and any relevant laws shall apply to any matter not governed by a text in this law.
- Article (67) of the Law for the Regulation and Protection of Industrial Property
The decisions of the committee may be appealed before the competent court in accordance with the Civil Procedures Law...
The absence of a provision allowing reference to other legislation to fill a vacuum in the Tax Procedures Law provides difficulties for the Commission to resolve tax disputes if it needed to take action that was not provided for in the Law. The Commission could not resort to the Code of Civil Procedure, Penal Code or other federal laws, because the law does not provide for such permissibility. The same is true for the competent court that will deal with tax disputes.